Mid-cap mutual funds offer several advantages, so it is little wonder that many investors are making a beeline for them.
It is a question that plagues many new investors: Should I invest in large cap funds or mid cap funds? Furthermore, you wonder which offers more returns over the same period of time.
Over the years, mid cap funds have shown high growth and even outperformed the large cap fund segment by a mile. But as a new investor, you may be tempted to research the fund over the last 3 or 5 years, and not find the kind of fiscal benefit that you are looking for. Let it be established at the outset that mid cap mutual funds must be checked out over a longer time frame. Also, it is important to go with the right mid cap funds offered by leading fund houses only.
What are mid-cap funds?
These are mutual fund schemes that invest primarily in companies that are classified as ‘medium’ in the markets. These companies have a medium capitalisation and are more compact than large companies, while being bigger than small companies. They show a high potential for expansion and profitability – this factor makes mid cap mutual funds quite attractive to investors.
Leading mutual fund houses in India have been steadily investing in mid-cap stock. A major reason for this is that the share prices on large cap funds have increased dramatically over the last few years. Thus, the prices of mid-cap mutual funds are much more within reach, and the prices show more stability even as they inch upwards.
Why you should invest in mid cap equity funds
Over the last few years, mid cap mutual funds have far outperformed large cap funds and small cap funds in India. Experts predict that this trend will continue for a few more years. Thus, your investment in mid cap funds is bound to appreciate well over time.
When buying mid cap equity funds, do check past performance in bullish markets and your goals vis-à-vis your investment strategy and risk profile.
